Various organisms have at least one enzyme that degrades the RNA of RNA-DNA hybrids. Such hybrids result in vivo from transcription and often are associated with DNA replication, even in replication of retroviruses including HIV. These ribonucleases H (RNases H), so far, fall into two classes based upon primary amino acid sequence similarity. From our studies, we know that the well-characterized Escherichia coli RNase HI has homologs in many different species including human and mouse. We know that these mammalian proteins resemble in sequence and function the RNase H1 of Saccharomyces cerevisiae by having a double-stranded RNA-binding activity in addition to the RNase H activity. Similarly, the bacterial RNase HII protein has counterparts in eukaryotes. RNases H perform important cellular functions and it is important to know how and by what means these enzymes are synthesized. For example, the use of DNA drugs employed in oligonucleotide-based antisense therapy relies on endogenous RNases H to degrade certain disease causing mRNAs (RNAs synthesized at inappropriate times or locations). The ability to increase RNase H activity in target cells could make these antisense DNAs more effective drugs. In a similar vein, certain types of drugs targeted to inhibit the RNase H activity of HIV reverse transcriptase could also inhibit the cellular enzymes leading to undesired effects. This year we have made considerable progress in examining the regulation and activity of RNase H2 of S. cerevisiae and also in learning more about the details of antisense DNA oligonucleotides. We previously reported that transcription of the RNH2L gene fluctuates in amounts as the cells progresses through the cell cycle. We noted that a DNA element upstream of the gene is relatively rare in S. cerevisiae occurring 110 times in the entire genome and only 29 times in a manner in which it can positively regulate transcription of the adjacent gene. This element contains two overlapping DNA sequences recognized by transcription factors responsible for expression in S- and G2/M phases of the cell cycle and we have demonstrated that both are used to aid transcription of the RNH2L gene. Alterations in the DNA element sequence manifest themselves in modified expression patterns of other genes as well as in the expression of the RNH2L gene itself. Perhaps some of the other 28 genes with this overlapping promoter elements are also regulated similar to RNH2L. The RNase H2Lp protein purified from S. cerevisiae has high levels of RNase H activity yet the same protein expressed in E. coli is inactive. We find other polypeptides co-purify with the active form of the enzyme suggesting that multiple subunits comprises the active enzyme. Cell-cycle regulation of the RNH2L gene expression together with the differential expression due to the overlapping DNA sites suggests the protein may have different subunits at different stages of the cell-cycle to participate in either DNA replication or DNA repair. These results indicate induction or expression of the RNase H2Lp may not be sufficient for increasing RNase H activity associated with this polypeptide. In fact, when overexpression of the RNase H2Lp does occur, we have found only a modest increase in RNase H activity. To better understand how RNA-DNA hybrids are recognized by RNases H, and thereby aid in our ability to use antisense-based therapies, we have made several novel modifications of the DNA component. One type modification was to add various substituents at the 3'-end of the DNA oligonucleotide. Differences in the site of cleavage of RNA of the RNA-DNA hybrid observed telling us more about the interaction of the RNase H with the RNA-DNA hybrid. These results from this year help us to understand the roles mechanism of action of these important proteins